My husband and I own a small plumbing business specializing in service work. He has been talking about quitting and getting a job. We are broke, living in one of our rentals and just had a baby. He is too talented, in my opinion, to work for someone else.Not only do his customers love him, but the supply house that refers him out to people report that he is the only one in 20 years that their customers have called to say how wonderful he was. I am trying hard to convince him to stay in business, despite our current situation.

We have struggled along for 5 years.I still haven't
figured out how people live with an unstable
salary;never knowing what's coming in. It's impossible
to plan. The economy is bad, and we are aware that
this is not helping. I keep telling him that when the
economy gets better, he will be doing better. But when
we work the numbers, it works out to be about the same
that he could get working for someone else, with less
headaches.I think living here and with a new baby,
this is looking more and more appealing to him.

This is based on what hear is industry standards: he
can only bill half of the hours he works, so a 40 hour
workweek = 20 * 60 =1200. If he made 30 working ft for someone else it would be the
same. The only way to make more is to raise rates
and/or try to recoup more hours. I am hoping that this
"industry standard" is inaccurate. According to the taxes, it appears that he is
getting more efficient. He seems to consistently be
making a higher percentage every year when compared to
sales.

I see other people in business for themselves and they
are successful. I know it takes time, but what else
are they doing?

I guess what I need from you is an explanation on how
it all works. Will it really get better at some point
and how?


I'd appreciate any and all advice.
Thanks!
Jeannie

Jeannie

Hi Jeannie...

There are too many variables and unknowns for anyone to be able to tell you when it will all pay off for you. We don't know your market size etc. If you're in a town of 300 people...it may never pay off. However, if you're in a major metro market...it could be tomorrow.

I have several companies and none paid off in the same time-frame. My oldest was started in 1989...while it grew steadily each year it seemed to take most of the profit to support its growth, so I was living below the poverty level for many years. At about the 12 yr mark, it had grown to the point that it was spinning off more profit than it needed to support its growth. What I've made over the last 7 or 8 yrs has more than made up for the years of poverty. I can tell you there were plenty of times during the struggle I felt just like your husband. In fact, one of the partners did leave during that period, his wife was tired of him not making enough money. I tried to talk him out of it, but his wife was riding him too hard and to keep his family in tact he felt he had to leave. He's a good friend, still struggling to make a good living working for someone else when had he stayed with the company, based on his share of it, he would have been making almost $200k/yr for the last 7 or 8 yrs.

I commend you for supporting the idea of your husband sticking with it...I'm sure he feels in his heart of hearts that he's letting you and the baby down...just assure him he's not.

I don't know your "industry standards" or where you're located and how it's done there. I'm in Los Angeles and here they charge for everything. Any kind of service company has a travel charge that covers the drive time between calls that would be unbillable otherwise. Then they have a minimum service call. I had my refrigerators ice-maker repaired recently and I was hit with a $35 travel charge, $55 service call, and then parts and labor. If he doesn't already, have him get set up to take credit cards...by taking credit cards, it will minimize the time he has to spend billing customers and waiting for payment etc. Again, if he hasn't already...have him get in touch with local developers to sub-contract their plumbing work. At some point he'll hit a wall. He'll be billing 40hrs a week and will be up against having to hire another person. This means in the early days of the new employee, a part of his cost will have to be underwritten from you husbands 40hrs...so the struggle will continue. This is where many small businesses stall. There isn't enough work for 2, but too much for 1 so the owners won't "invest" in the growth and the business stalls.
It is an investment. He'll be investing in the new employees salary, and will get a return on it...this is where the others in business you see living the good life are making it. We all only have so many hours we can work and generate income, when we hire others, we make a profit on their efforts...then again he'll face it when there's too much work for 2, but not enough for 3. Now the investment will come from the profit he's making from the second employee instead of from his 40hrs...then eventually, he'll be making a profit from the efforts of 2 people.

If you ever need a pep-talk just email me...I'll do what I can
Good luck...
Denny

Denny

Hi Denny-
Thank you again for your advice.

I think you may have hit it head-on about feeling like he's letting us down. I also think that he wants to work so badly, even going off to work for someone else is appealing. I keep tell him that we will be fine, just need to get through this rough part.

We do charge a service charge, new as of last year. I discovered that back in 2004 when he was slammed with work, he would have made a lot more money than he has ever made if he had the service charge then. He has gotten a lot more efficient with things as well. It's just really tough right now as things are really slow.

We really like the part of looking at the business as an investment. That puts it into a new perspective. And hopefully, business will pick up so that we can add people.

Jeannie

Jeannie

It is difficult to know when when is when; especially with a small business.

Very often they say that if you're not making money by your fifth year that you aren't doing something wrong.

It's much easier, I think to look at what your hubby may be doing that is wrong.

For example... Why is he only billing half the hours he works? I just had someone come in to run a snake with a camera down one of my pipes to see why the system was backing up.

It took 15 minutes.

I paid the 15 minutes travel each way and a minimum of 1 hour's time for the benefit of a visual to learn that the pipe was broken. He didn't even give me a quote for fixing the broken pipe at that price.

If the numbers are consistently going up, then it bodes well. One thing that you should look into is setting up a slush account, credit line with the bank that your hubby can use to pay his monthly income in months when the money is low.

Have you had a business consultant examine your business? Many local small business centers offer this service for free. If not, you can contact your local community college, MBA program, sometimes they offer it as well.

If you feel like sharing some details, maybe the members of IC can help you brainstorm and figure out how to improve the business.

Tina Brooks, VP Marketing
Brooks Pepperfire Foods, Inc.
Makers of Peppermaster Hot Sauces
http://www.peppermaster.com

Eat more peppers!

Hi Tina-

Thanks for your comments. Did you mean that if we aren't making money in the 5th year then we ARE doing something wrong?

It sure seems that way.

I've heard about the line of credit, but I don't really understand what it is. I will check into it though. It sounds like a good idea.

We charge customers a service charge plus labor and parts. But not a separate charge for travel. The service charge helps with covering that. But, he (feels) that he can't charge customers for time spent on paperwork, or time spent running down parts. And, estimates are free.
He doesn't want to price gouge his customers.

Up until now, we've run a word of mouth kind of business. Looking at this numbers and adding the service charge (he began this in 2007) I think he would have done a lot better in the early years when we were busy. His percentages are improving as well, suggesting an improvement in efficiency. We do have an accountant/business consultant who is great and trustworthy and he keeps telling us that we are doing great.
He has few plumbers as clients and he assures us that they do make money.

The biggest problem right now is the fact that we are slow, due to the economy. I think that never having done any advertising in the past has hurt us as well;no one knows were are out there.

I really do appreciate the advice from both you and Denny. Thanks again.


Jeannie

Jeannie

>Hi Tina-
>
>Thanks for your comments. Did you mean that if we aren't
>making money in the 5th year then we ARE doing something
>wrong?
>
>It sure seems that way.

It's what they say. I think that if after five years you aren't making money, though, you need to examine why not. I also think that based on what you posted, that your husband may not be charging enough... Believe it or not, that can and will debase the value of your product.


>I've heard about the line of credit, but I don't really
>understand what it is. I will check into it though. It sounds
>like a good idea.
>

Contact your bank. They'll be able to help figure out what you need.

>We charge customers a service charge plus labor and parts. But
>not a separate charge for travel. The service charge helps
>with covering that. But, he (feels) that he can't charge
>customers for time spent on paperwork, or time spent running
>down parts. And, estimates are free.
>He doesn't want to price gouge his customers.
>
>Up until now, we've run a word of mouth kind of business.
>Looking at this numbers and adding the service charge (he
>began this in 2007) I think he would have done a lot better in
>the early years when we were busy. His percentages are
>improving as well, suggesting an improvement in efficiency. We
>do have an accountant/business consultant who is great and
>trustworthy and he keeps telling us that we are doing great.
>He has few plumbers as clients and he assures us that they do
>make money.
>
>The biggest problem right now is the fact that we are slow,
>due to the economy. I think that never having done any
>advertising in the past has hurt us as well;no one knows were
>are out there.
>
>I really do appreciate the advice from both you and Denny.
>Thanks again.
>
>
>Jeannie

I can't speak to advertising... I do believe in marketing though... you might consider partnering with some hardware shops to do some workshops... get the word out. Maybe have hubby write a plumb-it-yourself column in the newspaper... Whatever gets the world thinking he knows his stuff is going to help.

And don't undersell himself!

Good luck with it.


Tina Brooks, VP Marketing
Brooks Pepperfire Foods, Inc.
Makers of Peppermaster Hot Sauces
http://www.peppermaster.com

Eat more peppers!